KU rate hike request undermines energy efficiency, renewables

Utilities across the nation, including Kentucky Utilities, are trying to shift more of their fixed costs to their meter fees — the monthly sums all customers must pay, whether we use a little or a lot of power— to protect their profits from customers installing energy-saving equipment or solar panels.

If the Kentucky Public Service Commission approves KU's proposed rate restructuring, all residential customers would have to pay $18 every month before ever turning on a light or an air conditioner, in addition to paying higher rates for every kilowatt-hour of power they use. We have the following objections:

■ Fueling economic injustice: While customers can conserve their use of electricity, they cannot control meter fees. Lower-income households especially would be hurt by $18 a month. Utilities have long been allowed to pass some of their fixed costs to ratepayers through meter fees. However, those costs haven't changed so radically as to justify what would be a 6 percent hike in KU's meter fee.

■ Undermining energy efficiency: Raising meter fees would cut the savings customers earn by investing in efficiency measures to lower their bills. When calculating the payback and return on investment, say, on insulating an attic or buying a more efficient AC unit, customers rightly count only savings in usage costs. If more utility costs are shifted to the meter fee, part of customers' savings is lost.

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■ Retarding renewables: Customers who install solar panels for electricity or hot water would see the return on their investments diminish and their payback periods lengthened, because solar customers without back-up batteries still pay meter fees.

Some utilities have claimed that rate restructuring is necessary to protect customers without solar panels from subsidizing customers with panels. In reality, solar customers send excess power into the utilities' grids during the day when overall customer demand is high, and draw power when overall demand is low. Thus they help to level demand, helping utilities to operate more efficiently and cost effectively.

■ Ignoring the Clean Air Act: The U.S. Supreme Court has ruled three times that the Environmental Protection Agency must apply the law to the carbon pollution that causes climate change. New, game-changing regulations soon will require KU to make big cuts in emissions.

Energy efficiency and renewable energy sources are our cheapest, cleanest and fastest options for meeting those requirements. Beyond a more stable climate, they offer lasting economic benefits: lower utility bills and thousands of jobs created throughout the state.

The health benefits of reduced air pollution cannot be overstated. Lexington has one of the largest footprints among the 100 largest U.S. cities, according to the Brookings Institute, chiefly due to our power plants.

A Harvard University study showed that states with Kentucky's reliance on coal had higher mortality rates from air pollution.

The last thing Kentucky's Public Service Commission, expected to rule on KU's request next week, should do is allow rate restructuring that would undercut the business case for energy efficiency and renewables.

■ Overreaching monopoly: KU is authorized to provide essential services where market mechanisms would be impractical. Instead of multiple utilities each laying power lines, the PSC authorizes one utility to operate a monopoly, albeit with added regulation to protect consumers. But the concept wasn't intended to allow utilities to protect themselves from alternative technologies, such as energy efficiency and solar rooftops, as would this proposal.

In short, restructuring seems much more about ensuring a monopoly's profits than about fairness toward customers, much less about working toward a cleaner, healthier and more sustainable Kentucky.

Kentucky's attorney general is charged with representing residential customers in PSC proceedings. He needs to hear from consumers. Please visit www.louisvillecan.org today for links to the PSC and OAG web sites' comment forms.